Nearly 30 million Mexican people—a quarter of the Mexican population—live in rural communities. On the margins, with no basic infrastructure, communities like Santiago Nuyoó are almost entirely left out of Mexico’s economic growth and progress. Telecomm, the state-run telegraph agency, is leveraging its network of 1,600 of rural branches to build a new model that brings basic mobile services and bank accounts into the hands of rural inhabitants. By charging market rates for local voice and basic banking services, Telecomm believes they can offer a viable business that will spur economic development in rural communities.
In previous blogs we described the branchless banking pilot that Telecomm, the state Telegraph agency in Mexico was conducting in Santiago Nuyóo, México. We described what the pilot was seeking to achieve, as well as what we learned about mobile account usage.
In this blog, we thought it would be interesting to provide a first-hand look at what users say about the benefits they draw from using mobile accounts in such a remote setting. As you will see in this video, a single product means something different to different groups of people.
Claudia owns a gift store in town and values her mobile account as a cashless payment mechanism because it eases her ability to manage the stock of cash in her store. “It’s very practical – they pay me here, the money stays here [in the wallet] and I can take it out of an ATM in the city”.
“Before it was very difficult for us to go to Tlaxiaco, the nearest city, and open a bank account because of the cost of transportation and our time, and now we have an account linked to our phone,” she adds.
Mario, one of the top users, is known in these parts as the “chicken boy”. He cooks rotisserie chicken at home and sells it throughout the countryside around Santiago Nuyóo. For him too, cashless payments are important. “It’s very complicated to get change. And now [that customers have mobile accounts] they can make mobile payments, we no longer worry about finding change”.
Reyna lives in Plan de Zaragoza a township close to Santiago Nuyoo. She is one of the many people in the surrounding area who walk into town regularly. She’s a single mother, and uses the service to send money to her daughter who lives with relatives in Santiago Nuyóo during the week so her daughter can go to school. “I spend less because I don’t have to pay my transportation, or lose the whole day walking.” The value to her is reducing the cost and effort associated with recurring money transfers.
Others use the mobile service less frequently, but still find the mobile account useful for saving, depositing cash into their accounts at the Telecomm office in Santiago Nuyoó. To them, the ability to store money away in safe place, yet close enough to access it if needed is important.
In general, we can draw a few conclusions from the stories featured in the video:
Single product – multiple value propositions
Users draw value in different ways. In this case, there doesn’t seem to be a single “killer” proposition. Although in many cases it’s about the ease of moving money across distance, the purpose and the context of the transactions make a difference in the value proposition for customers. Providers need to understand this in order to adequately tailor pricing, marketing, and overall value proposition for customers.
Universal drivers of value - Across all segments of users, some themes seemed to come up invariably:
- People trust the provider, it is right there in the middle of town where they live, with a face they trust.
- The mobile account solves a recurring problem that has a high cost and/or high effort associated with it (e.g., having to travel far to pay a bill; having to walk into town to send money to a family member; dealing with lack of cash to hand change to customers).
Beyond accessibility - What we learn here goes beyond simply making the case for building access to new services for people in remote, disconnected towns. This scenario is a concrete example of the role governments can play in exploring and developing market segments that are outside of commercial limits, but which in time may become commercially viable.
Xavier is part of the Technology and Business Model Innovation Team, and Martha is a consultant in Mexico, both at CGAP.
I am much more interested in this experience in México.Could be applied in the microfinance sector in Oaxaca (Mx)?
Julio, this is scheme is applicable to any financial service. The user have a Level II Account linked to a Card and to the Mobile Phone. They can receive and send transfers to any bank in Mexico via SPEI.
Estamos trabajando en Oaxaca llevando luz con paneles solares a poblaciones de menos de 100 habitantes donde CFE no tiene previsto electrificar ( www.accioname.org).Tenemos equipos instalados en 180 familias del istmo y vamos a suministrar 1.500 equipos más en las zonas mixe en este año.Estaríamos muy interesados en conocer los detalles del pago por celular para que nuestros usuarios nos puedan abonar las cuotas mensuales. ¿Me podrían facilitar un contacto o enviarme un mensaje a mi dirección electrónica?